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Matching, Specialties and Wage Inequality

Author

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  • Konstantinos Eleftheriou

    (Department of Economics, University of Essex, UK)

Abstract

Empirical evidence show that there is a negative relation between policies that accelerate the matching process in labor market and "within-group" wage inequality. We apply the standard "search and matching" framework to construct a labor market model with ex-ante heterogeneous workers, so as to examine and interpret this phenomenon. We show that a composition effect working through the effective rate of employment opportunities (decision pattern through which individuals accept or reject jobs in which they are less specialized) is responsible for the increase in within group inequality as matching process is accelerated.

Suggested Citation

  • Konstantinos Eleftheriou, 2008. "Matching, Specialties and Wage Inequality," Economics Bulletin, AccessEcon, vol. 10(11), pages 1-12.
    • Handle: RePEc:ebl:ecbull:eb-08n30001
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    File URL: http://www.accessecon.com/pubs/EB/2008/Volume10/EB-08N30001A.pdf
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    References listed on IDEAS

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    1. Daron Acemoglu, 1999. "Changes in Unemployment and Wage Inequality: An Alternative Theory and Some Evidence," American Economic Review, American Economic Association, vol. 89(5), pages 1259-1278, December.
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    4. Melissa Osborne & Herbert Gintis & Samuel Bowles, 2001. "The Determinants of Earnings: A Behavioral Approach," Journal of Economic Literature, American Economic Association, vol. 39(4), pages 1137-1176, December.
    5. Machin, Stephen, 1996. "Wage Inequality in the UK," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 12(1), pages 47-64, Spring.
    6. Levy, Frank & Murnane, Richard J, 1992. "U.S. Earnings Levels and Earnings Inequality: A Review of Recent Trends and Proposed Explanations," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1333-1381, September.
    7. Heckman, James J & Sedlacek, Guilherme, 1985. "Heterogeneity, Aggregation, and Market Wage Functions: An Empirical Model of Self-selection in the Labor Market," Journal of Political Economy, University of Chicago Press, vol. 93(6), pages 1077-1125, December.
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    Cited by:

    1. Eric Smith, 2010. "Sector-Specific Human Capital and the Distribution of Earnings," Journal of Human Capital, University of Chicago Press, vol. 4(1), pages 35-61.

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    More about this item

    Keywords

    wage inequality;

    JEL classification:

    • J0 - Labor and Demographic Economics - - General

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